Fresh verification of revised project costs, GST impact and TDR allocation required before profit recognition under PCM.

Revised project cost estimates, TDR/development rights allocation, GST impact, and profit recognition under the Percentage Completion Method required fresh factual verification because the lower authorities had not fully examined the revised basis claimed by the assessee. The Tribunal noted that the effect of floor-plan changes, revised GST regime and denial of input tax credit, phase-wise acquisition and use of development rights, and consistency of revenue recognition with registered agreements and cost base were all fact-dependent matters. It found that neither outright rejection nor acceptance without exhaustive inquiry was justified, so the matter was set aside and restored to the AO for de novo adjudication.

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Issues: Whether the additions deleted by the first appellate authority in respect of revised project cost, allocation of TDR/development rights, GST impact, and profit recognition under the Percentage Completion Method required to be restored for de novo verification.

Analysis: The assessee revised the survey-stage estimates at the return stage on account of change in floor configuration, revised GST regime with denial of input tax credit, and reallocation of TDR/development rights across phases of the project. The Tribunal held that the factual foundation for these revised estimates had not been comprehensively verified by the lower authorities. The impact of GST on construction cost, phase-wise acquisition and utilisation of TDR, the effect of floor-plan revision, and the consistency of revenue recognition with registered agreements and the corresponding cost base were all factual matters requiring detailed examination. It found that neither outright rejection by the Assessing Officer nor acceptance by the first appellate authority without exhaustive verification was justified.

Conclusion: The matter was set aside and restored to the Assessing Officer for fresh adjudication after proper factual verification, and the Revenue's appeals were allowed for statistical purposes.

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